An employer can reimburse employees for business related expenses. In principle, the reimbursement of genuine business expenses is not treated as taxable income in the hands of the employees and company directors, as it concerns costs proper to the employer or company. In practice, business expenses are often reimbursed via detailed expense reports (substantiated by supporting documents). However, for certain expenses the Belgian tax authorities accept the payment of lump-sum allowances, if these are based upon objective and consistent criteria.
A lump-sum reimbursement is accepted for allowances paid to employees and company directors as a reimbursement for business travel within Belgium, provided that the amounts are in accordance with the similar allowances paid by the Belgian authorities to their personnel. Going forward, this general principle remains in force, but the Royal Decree of 13 July 2017 determining the allocations and allowances of federal civil servants modifies the rules in a significant manner as from 1 September 2017.
Until 31 August 2017, the following allowances (updated amounts as of 1 July 2017) paid to employees who were not working at the office but were travelling within Belgium, could be considered as costs for not being able to use the office facilities and lunches:
- EUR 3,98 for business trips of more than 5 hours but less than 8 hours per business day
- EUR 19,99 for business trips of at least 8 hours per business day, or at least 5 hours but over lunch time (i.e. including the 13th and 14th hour of the day)
- Additional amount of EUR 45,54 for stay overnight (hotel, provided that the employer is not also reimbursing the “stay overnight” expenses directly or indirectly via expense report)
- Additional amount of EUR 23,97 for stay overnight (in exceptional cases whereby the employee would be able to use a free accommodation).
A federal civil servant will from now on be entitled to a tax-free meal allowance of EUR 16,73 (indexed amount applicable as from 1 September 2017) for business trips within Belgium provided that the following conditions are simultaneously met:
- the business trip lasts at least 6 hours
- the business trip occurs outside a radius of 25 km
- no other benefit or compensation is granted for the cost of a meal
Moreover, for frequent travellers, it is possible to grant a monthly lump-sum expense allowance limited to EUR 267,68 (i.e. 16 times the daily lump-sum amount of EUR 16,73).
In case of overnight stay an additional (daily) allowance of EUR 125,51 (indexed amount applicable as from 1 September 2017), can be granted tax-free provided that the following conditions are simultaneously met:
- the business trip occurs outside a radius of 75 km
- the cost of the accommodation is not borne by the federal service
- the business trip does not give rise to any benefit of the same nature (in the hands of the civil servant)
These lump-sum amounts are considered based on objective and consistent criteria as from 1 September 2017. It is anticipated that these amounts are also applicable to the private sector. At this point, it is however unclear to what extent that all of these conditions for civil servants will apply to employees and company directors in the private sector.
The principles regarding the lump-sum cost reimbursements for foreign business trips remain unchanged. For the updated amounts in relation to foreign business travel, we refer to our newsflash of 3 October 2017.